Semiconductor Equipment Monitor

-- Semiconductor International, 3/1/2002

The composite book-to-bill ratio for North American-based semiconductor equipment manufacturers rose for the fourth consecutive month during December 2001. For very $100 worth of equipment shipped during the final month of last year, an estimated $78 worth of new orders were received by manufacturers. However, shipments have now trailed orders for 13 straight months, and the encouraging improvement in the book-to-bill ratio is attributable entirely to the fact that billings have fared even worse than bookings during the past year.

Preliminary data for the final month of 2001 shows bookings rising by a solid 7.1% from their November level, while billings inched up just 0.7%. The value of equipment shipped by North American manufacturers fell below $1B during each of the final four months of 2001. And an average of only $630M worth of new orders were received by equipment makers during the final third of 2001, so any dramatic improvement in the industry’s fortunes during 2002 is highly unlikely.

The industry’s book-to-bill ratio bottomed out at the record-low level of 0.44 during April 2001, according to data compiled by Semiconductor Equipment and Materials International (SEMI), and has been climbing steadily if slowly since that time. But last December’s reading was still well below the 0.99 level recorded during the final month of 2000. December 2001 billings/shipments were 65% lower than the level reported during December 2000, while bookings/orders were off 77% during the same period of comparison.

Global equipment sales totals for the first 11 months of 2001 trailed the January-November 2000 total by 38.4% (the reporting of worldwide numbers lags the report for the North American market by a month). But the value of worldwide shipments last November was a much more disheartening 70.3% lower than during the same month of 2000.

Equipment shipments to North American chipmakers during the first 11 months of 2001 were valued at a level 33.7% below the total for January-November 2000. Although this was a less severe decline than the global (i.e., negative 38.4%) trend, the total value of equipment shipments to the region during November 2001 trailed the November 2000 total by “only” 55.8%.

Shipments to Japan held up relatively better than throughout the rest of the world during 2001, but market conditions began to deteriorate badly during the second half of the year. Although the value of semiconductor equipment shipped to the country through the first 11 months of 2001 was only a comparatively modest 9.9% less than the value of January-November 2000 shipments, by November of last year shipments were falling 69.7% short of the total for the same month during 2000.

Shipments of semiconductor equipment to Europe during the first 11 months of 2001 were 37.3% less in estimated dollar value than the cumulative total for January-November 2000 — with last November’s shipments level coming in 74.2% lower than in November 2000. And numbers for the Asia-Pacific (excluding Japan) region deteriorated the most of any part of the globe during 2001. After more than doubling between 1999 and 2000, semiconductor equipment sales to Taiwan, South Korea, Singapore, Malaysia, and the rest of the Asia-Pacific region during January-November 2001 came up 54.7% short of the total for the first 11 months of 2000. And the value of shipments to the region last November was an extraordinary 80.4% below the level for the same month of 2000.

Our recently revised forecasts reflect an underlying belief that the market is in the process of bottoming out. Despite the continued severe recession in business investment spending, and the glut of manufacturing capacity worldwide, there’s increasing evidence of some momentum gathering on the technology (vs. capacity) “buy” side of the market. As more firms become convinced of the likelihood of a worldwide economic recovery during the second half of this year and into 2003, pressure will build for investment in new, more-efficient, cost-reducing chipmaking equipment and technologies.

It will be a slow and bumpy road back for the industry, however. When final numbers are available for full-year 2001, we’re looking for the value of semiconductor equipment shipped during the year to have come up about 40% short of 2000’s total of $47.7B. And another decline — of a much smaller magnitude — seems likely during 2002 as well, even though momentum should slowly start to build by the fall of this year.